Nordex SE — Call Transcript 2014

Nov 13, 2014

Nordex SE Conference Call Q3 2014

6. Appendix

1.	Highlights 9m 2014	Dr. Jürgen Zeschky
2.	Market snapshots	Dr. Jürgen Zeschky
3.	Operational progress	Dr. Jürgen Zeschky
4.	Financials 9m 2014	Bernard Schäferbarthold
5.	Outlook 2014 / 2017	Dr. Jürgen Zeschky

Highlights 9m 2014 vs. 9m 2013

• Order intake up by 6 %
• Sales up by 21 %
• EBIT margin at 4.7 % - Q3 stand alone at 5.1 %
• Further improvement in the working capital ratio to -3.4 %
• Significant positive free cash flow of EUR 120 m
• Net liquidity position of EUR 263 m
• Narrowing and upgrade of guidance for major KPIs

1.	Highlights 9m 2014	Dr. Jürgen Zeschky
2.	Market snapshots	Dr. Jürgen Zeschky
3.	Operational progress	Dr. Jürgen Zeschky
4.	Financials 9m 2014	Bernard Schäferbarthold
5.	Outlook 2014 / 2017	Dr. Jürgen Zeschky
6.	Appendix

Order activities picking up in Germany and France EMEA North driven by Finland, UK and Ireland Market entrance in Lithuania (24 MW Delta; 2nd order 45 MW)

New EU climate targets in line with expectations – renewable ambitions still supportive

Strong momentum in Turkey due to grid license rush Closure of round #3 in South Africa begins in 11/2014

Significant increase in sales in Latin America (+64%)

1. SUCCESSFUL WINDENERGY HAMBURG – MEDIA AWARD FOR INDUSTRIAL INNOVATION

2. Successful premiere of the fair in Hamburg with international visitors, suppliers, customers and investors

3. World premiere and showcase of the NR 65.5 – the blade for the new N131/3000 light wind turbine

4. Presentation of mid-term financial targets (sales of EUR 2 bn; 7-8 % EBIT margin by 2017) during the Capital Markets Day

5. Business journal "€uro" voted Nordex SE as Germany´s most innovative industrial enterprise

6. Criteria:
7. R&D spending
8. Innovation
9. Quality
10. Continuity
11. Internationalization
12. Long-term analysis (10 yrs)

1.	Highlights 9m 2014	Dr. Jürgen Zeschky
2.	Market snapshots	Dr. Jürgen Zeschky
3.	Operational progress	Dr. Jürgen Zeschky
4.	Financials 9m 2014	Bernard Schäferbarthold
5.	Outlook 2014 / 2017	Dr. Jürgen Zeschky
6.	Appendix

Order intake 9m 2014 vs 9m 2013 (in EUR m) Order intake 9m 2014 by region

• Order intake of EUR 1,253 m Nordex´ best 9m ever
• More than 90% from EMEA: Germany, France, Turkey and Finland as main markets
• Bestseller N117/2400 (share of 45%), Generation Delta accounts for 19% of new orders

Development of the firm order book 9m 2013 – FY 2013 – 9m 2014 (in EUR m)

• Firm order book already covers a significant part of 2015 sales
• EMEA currently accounts for 90% of the firm order book
• Book-to-bill ratio at 1.1

Production – Project Management - Service

Installations: 1,068 MW (+16% yoy)

437 turbines in 16 countries installed – main markets Germany, Turkey, Ireland and South Africa

Service sales: EUR 118 m (+17% yoy) Renewal rate: remains at a high level of 98%

R&D

Status N131/3000

• Static blade test passed first milestone certificate for blade type NR 65.5
• Successful logistical test during the Hamburg fair – transport right into the city centre using new specialized equipment
• First order signed for 24 MW*
• Installation of the first turbine planned for end of November (Janneby, Germany)

*current status conditional; communal wind farm company

5.	Outlook 2014 / 2017	Dr. Jürgen Zeschky
4.	Financials 9m 2014	Bernard Schäferbarthold
3.	Operational progress	Dr. Jürgen Zeschky
2.	Market snapshots	Dr. Jürgen Zeschky
1.	Highlights 9m 2014	Dr. Jürgen Zeschky

6. Appendix

In EUR millions

	9m2014	9m 2013	∆ in %
Sales	1,266.6	1,050.7	20.5
Total revenues	1,288.6	1,086.3	18.6
Cost of materials	(1,014.5)	(844.6)	20.1
Gross profit	274.1	241.7	13.4
Personnel costs	(124.0)	(113.0)	9.7
Other operating (expenses)/income	(60.6)	(68.7)	(11.8)
EBITDA	89.5	60.0	49.2
Depreciation	(29.7)	(29.0)	2.4
EBIT	59.9	31.0	93.2
Net financial result	(17.8)	(20.3)	(12.3)
EBT	42.1	10.7	>100
Tax	(14.2)	(5.5)	(>100)
Net profit	28.0	5.3	>100

• Sales increase of 21%, sales more evenly spread across the focus markets
• Gross margin affected by ramp-up costs for generation delta
• EBIT margin improvement up to 4.7% (EBIT/Sales) 5.1% in Q3 2014
• Significant improvement in net profit: EUR 28.0 m

Conference Call Q3 2014| Nordex SE | 13 November 2014

Key figures cash flow statement 9m 2014 Key figures cash flow statement 9m 2013

	in EUR m		in EUR m
Cash flow from operating activities	162.7	Cash flow from operating activities	-58.1
Cash flow from investing activities	-43.0	Cash flow from investing activities	-46.8
Free cash flow	119.8	Free cash flow	-104.9

• Significant improvement in operating and free cash flow yoy
• Positive operating cash flow underlines strong business performance and working capital management
• Positive free cash flow reflects operational and financial progress in the organisation

4. POSITIVE DEVELOPMENT OF INVENTORIES AND WORKING CAPITAL RATIO

Development of inventories (in EUR m) and working capital ratio (in %) 2011 – 9m 2014

• Further reduction of the W/C ratio down to -3.4%; ratio expected to be around zero at year end
• Inventories up by 7% yoy due to higher scheduled production and installations in H2 2014 but still slightly below YE 2013 level (EUR 264 m)

In EUR millions

	30.9.2014	FY 2013		30.9.2014	FY 2013
Liquid funds	312.0	333.0	Current bank borrowings	0	8.4
Fixed deposit (>3 months)	105.0	0	Trade payables	260.2	190.3
Trade receivables and future receivables	197.3	214.0	Other current provisions	57.2	45.3
Net inventories	256.6	263.9	Other current liabilities	348.1	341.2
Other current assets	85.3	88.6
Current Assets	956.2	899.5	Current liabilities	665.5	585.2
Property, plant, equipment	122.9	117.4	Non-current bank borrowings	0	16.9
Capitalized R&D expenses	103.8	94.3	Bond1	154.6	155.6
Deferred tax assets	49.7	50.9	Deferred tax liabilities	36.3	32.9
Other non-current assets	34.0	29.3	Other non-current liabilities.	23.3	32.6
Non-current assets	310.4	291.9	Non-current liabilities	214.2	238.0
			Shareholders' equity	386.9	368.1
Total assets	1,266.6	1,191.4	Total liabilities	1,266.6	1,191.4

• Balance sheet remains very stable:
• Net liquidity increased to EUR 263.4 m (FY 2013: EUR 140.3 m)
• Equity ratio at a stable 30.5% (FY 2013: 30.9 %)

¹ Bond incl. interest

• 1. Highlights 9m 2014 Dr. Jürgen Zeschky
• 2. Market snapshots Dr. Jürgen Zeschky
• 3. Operational progress Dr. Jürgen Zeschky
• 5. Outlook 2014 / 2017 Dr. Jürgen Zeschky

4. Financials 9m 2014 Bernard Schäferbarthold

6. Appendix

5. OUTLOOK 2014

• Encouraging order intake so far
• High activity level in Q4 will drive sales and margins
• Working capital development will support a positive free cash flow

	2014e old	2014e update Q3
Order intake	EUR 1.5 – 1.7 bn	EUR 1.5 - 1.7 bn
Sales	EUR 1.5 – 1.6 bn	EUR 1.65 – 1.75 bn
EBIT margin	4.0 – 5.0 %	4.5 – 5.0 %
Cash flow	Positive op. cash flow	Positive free cash flow
Working capital ratio	<5%	0%
Investment	~ EUR 80 m	~ EUR 70 m

Big challenges solved during the turnaround ...

• Competitive products √
• Successful sales & service strategy √
• Strategic issues (CN, Offshore) solved √
• Refinancing completed √

... with further improvements to come by 2017

• Some operational issues remain

• Dedicated measures put in place to resolve these and to improve profitability further √

• We have successfully dealt with difficult challenges in 2012/13

• We are confident that we can resolve the remaining operational issues

TIME FOR YOUR QUESTIONS

Based on 80.882.447 shares, as of October 2014

As of November 2014

Date	Event
November, 13	Analyst call Q3 2014
November, 27	HSBC Zurich Conference
December, 4	HSBC Luxembourg Conference

6. DISCLAIMER

This presentation was produced in November 2014 by Nordex SE solely for use as a source of general information regarding the economic circumstances and status of Nordex SE. It does not constitute an offer for the sale of securities or an invitation to buy or otherwise acquire securities in the Federal Republic of Germany or any other jurisdiction. In particular it is not intended to be an offer, an investment recommendation or a solicitation of an offer to anyone in the U.S., Canada, Japan and Australia or any other jurisdiction. This presentation is confidential. Any reproduction or distribution of this presentation, in whole or in part, without Nordex SE's prior written consent is expressly prohibited.

This presentation contains certain forward -looking statements relating to the business, financial performance and results of Nordex SE and/or the industry in which Nordex SE operates, these statements are generally identified by using phrases such "aim", "anticipate", "believe", "estimate", "expect", "forecast", "guidance", "intend", "objective", "plan", "predict", project", and "will be" and similar expressions. Although we believe the expectations reflected in such forward -looking statements are based upon reliable assumptions, there are prepared as up -to -date and are subject to revision in the future. We undertake no responsibility to update any forward looking statement. There is no assurance that our expectations will be attained or that any deviations may not be material. No representation or warranty can be given that the estimates, opinions or assumptions made in, or referenced by, this presentation will prove to be accurate.

THANK YOU FOR YOUR ATTENTION.

Nordex SE

Ralf Peters Head of Corporate Communications Oliver Kayser Investor Relations Manager

Langenhorner Chaussee 600, 22419 Hamburg, Germany Phone: +49 (0)40 30030 1000 Fax: +49 (0)40 30030 1333 eMail: investor-relations@nordex-online.com

NDX1

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